‘Light at end of tunnel’ for synthetic rubber makers

Estoril, Portugal – Amid all the current economic gloom there was some 'light at the end of the tunnel' for delegates attending the annual general meeting of the International Institute of Synthetic Rubber Producers’ (IISRP).

A hint of better times ahead emerged from one the keynote presentations at this month's meeting in Estoril, near Lisbon – despite the paper's title: World Economic Outlook: Recession or not, outlook for 2023 is dismal.

Explaining that the global economy was set to stagnate over the next year, presenter Oxford Economics analyst Oliver Rakau said: “We expect shallow and brief recessions across the major advanced economies.”

Rakau forecast year-on-year global GDP growth to decline from 5.9% in 2021 to 2.8% this year. The recessionary trend would continue into 2023 with GDP growth down to 1.7%, before recovering to 3.2% in 2024.

On a more positive note, Rakau predicted an easing in supply-side inflation, some fall back in energy commodity prices. Such developments, allied with fiscal support measures, “should allow a modest growth pick-up as 2023 progresses.”

That, of course, is assuming that no further catastrophic events are visited on the global economy – and that rubber suppliers and end-users can ride out some tough challenges over the next two quarters at least.

That means dealing with headwinds around energy prices in Europe, a petering out of “the massive post-pandemic inventory re-build” – Rakau also later presenting figures showing “commodity prices & supply bottlenecks going into reverse.”

Other challenges included impact of soaring prices and tighter monetary policies on consumers spending, while Rakau said Capex was likely to suffer due to higher rates, weaker demand and economic uncertainty.

Meanwhile, a continuing zero-Covid policy looked set to continue to limit private sector growth in China, remaining a strong headwind within the country’s economy, the Oxford Economics analyst noted.

ERJ will report further on business and technology developments presented at the IISRP meeting, over the coming weeks and in the Nov/Dec issue of European Rubber Jorunal magazine.